Italian Telecoms and TV Broadcasting Regulation

Eutimio Monaco and Domenico Siciliano

Bird & Bird

Telecoms regulatory framework: new market analysis under EC Recommendation No. 879 of 2007

In 2008, the Italian Regulatory Authority (Agcom) started the analysis of a number of markets defined by the recent European Commission Recommendation of 17 December 2007 (2007/879/EC) on relevant product and service markets within the electronic communications sector susceptible to ex ante regulation in accordance with Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services (the 2007 Recommendation).
The analysis follows the previous one carried out by Agcom under European Commission Recommendation C(2003)497 of 11 February 2003 (the 2003 Recommendation). This considered a minimum set of 18 relevant markets in the communication sector, which Agcom analysed in depth between 2006 and 2007. In one case (Market 18), Agcom adopted a general resolution and referred to a subsequent proceeding for the definition in detail of the remedies to be imposed on the two incumbents found in the analogue television broadcasting services market. The proceeding ended in 2008 (Resolution No. 159/08/CONS of 9 April 2008) and the reference offers of the incumbents will be approved and implemented within the same year.
Even though the analysis started before 2008, it is now interesting to make a global review of the result of Agcom’s activity, because such results should be taken into account by Agcom when managing the new analysis cycle, considering that the 2007 Recommendation is, without prejudice to market definitions, the result of market analyses and regulatory obligations adopted by national regulatory authorities in accordance with articles 15(3) and 16 of Directive 2002/21/EC prior to the date of adoption of this Recommendation. See table below.
It is useful to point out that in 2008 the great majority of the claims filed by undertakings against Agcom’s resolutions on the 2003 Recommendation markets have been renounced by the claimants or rejected by the Administrative Court of First Instance of Rome (which holds the exclusive competence to decide appeals against Agcom’s resolutions). In the latter case, the court argued that the content of such resolutions is an expression of the ‘technical discretion’ of the Authority. Therefore, its decisions are not subject to investigation by the court in terms of administrative law compliance as long as they are not clearly illogical or unreasonable. The resolutions in this case were found neither illogical nor unreasonable.
At this stage, the remedies introduced by Agcom in light of the results of the first investigation cycle could be considered consolidated. The only appeal still pending is the one against the Market 18 resolution, which is likely to be decided during 2009.
In 2008 Agcom started the analysis of the following markets:
• call origination on the public telephone network provided at a fixed location and call termination on individual public telephone networks provided at a fixed location (Markets 2 and 3 of the 2007 Recommendation) (Resolution No. 324/08/CONS on 11 June 2008);
• transit services in the fixed public telephone network (Market 10 of the 2003 Recommendation) (Resolution No. 325/08/CONS on 10 June 2008);
• access and call origination on public mobile telephone networks (not expressly referred to by Agcom in any Market defined by the two EC Commission Recommendations, but reference could be made to Market 15 of the 2003 Recommendation) (Resolution No. 309/08/CONS on 5 June 2008);
• voice call termination on individual mobile networks (Market 7 of the 2007 Recommendation) (Resolution No. 305/08/CONS on 21 May 2008);
• wholesale terminating segments of leased lines and wholesale trunk segments of leased lines (Market 14 of the 2003 Recommendation) (Resolution No. 184/08/CONS on 16 April 2008);
• the minimum set of leased lines (Market 7 of the 2003 Recommendation) (Resolution No. 183/08/CONS on 16 April 2008); and
• publicly available local and national telephone services provided at a fixed location for residential customers and for non-residential customers (Markets 3 to 5 of the 2003 Recommendation) (Resolution No. 133/08/CONS on 12 March 2008).

Such analyses are likely to be concluded in 2009.
It is useful to point out that in 2008 when Agcom started five new market analyses, it referred to the definition of the relevant market to the 2003 Recommendation. Given that at the beginning of these investigations the 2007 Recommendation was already in force, Agcom’s approach could be probably considered not completely appropriate in light of the new content of the latter Recommendation.
The 2007 Recommendation states that it ‘is without prejudice to market definitions, results of market analyses and regulatory obligations adopted by national regulatory authorities in accordance with articles 15(3) and 16 of Directive 2002/21/EC prior to the date of adoption of this Recommendation’. Nevertheless, the provision shall be interpreted reasonably. This means that the results of the previous markets analyses should be taken into account, but ensuring at the same time that national regulation is up-to-date and consistent with the most recent EU regulation.
As a consequence, the remedies imposed Europe-wide to undertakings by the regulatory authorities shall be confirmed – if necessary – by taking into account the results of a new market analysis regarding whether the EC Commission had excluded the interested market from the relevant markets defined in the 2007 Recommendation.
The mere fact that the Commission has excluded a market from the list annexed to the 2007 Recommendation implies that such market is not subject to remedies until the national Regulatory Authority carries out a new investigation and states that it is not competitive. In such cases, remedies could be imposed only by carrying out a proceeding under article 6 of the Framework Directive.

Fixed telephony market: Telecom’s commitments on network access

In 2008 Telecom Italia, the incumbent in the Italian fixed telephony market, proposed to Agcom commitments on access to its fixed network (the Commitments), in order to meet the concerns expressed by the Authority in a number of resolutions regarding the relationship between the incumbent and its competitors and the supply of wholesale services necessary to such competitors in order to offer their services to the public in the downstream markets.
Before submitting its Commitments, Telecom Italia has created a new internal division, named Open Access, that manages the following activities:
• maintenance of the fixed network infrastructure;
• delivery of the access to the fixed network services; and
• technical assurance of the fixed network services.

Open Access manages autonomously and transparently the fixed network infrastructure, and it also supplies services to Telecom Italia’s commercial divisions.
Agcom published the final version of the Commitments on 29 July 2008 (Resolution No. 445/08/CONS). The Commitments are divided into 10 groups, each of which is intended to meet one or more specific concerns of Agcom.
Group 1 implementation of a new delivery process and a new wholesale clients management system;
Group 2 implementation of a new incentive system and a new code of conduct for Open Access personnel;
Group 3 implementation of a performance monitoring system;
Group 4 warranties of transparency for the performance monitoring system;
Group 5 warranties of transparency for technical plans for the quality of the fixed-access network;
Group 6 warranties of transparency for technical plans for the development of the fixed-access network;
Group 7 constitution of a vigilance committee;
Group 8 sale prohibition for network division personnel and training programmes for the sales forces;
Group 9 duty to notify of the supply of non-requested services; and
Group 10 duty to notify of the disconnection of CPS services.

Telecom Italia’s proposal provides that Commitments last five years. After such period Agcom can start a proceeding in order to review, completely or in part, the Commitments. Telecom Italia also proposes that Commitments will become ineffective at any time if the incumbent will not be holding significant market power over any access to the network wholesale market (ie, Markets 4, 5 and 6 of the 2007 Recommendation).
Agcom gave a 60-day deadline to the interested parties for the submission of comments on the contents of the Commitments. The Authority will complete its investigation considering the comments received and then decide whether to make the Commitments binding on Telecom Italia.

Digital terrestrial television: switch-off to be anticipated in a number of areas

In 2008 a great deal of activity occured in the the digital television broadcasting sector. In Italy the switch-off of analogue television transmissions is scheduled for 2012. The government has decided to anticipate the switch-off in a number of ‘technical areas’. In 2008 the areas have been identified as the following:
• Sardinia region (Resolutions No. 603/07/CONS and 53/08/CONS);
• Val d’Aosta region (Resolutions No. 200/08/CONS and 506/08/CONS);
• Piemonte Region (Resolution No. 200/08/CONS); and
• Autonomous Province of Trento (Resolution No. 200/08/CONS).

With reference to Sardinia region, the interested operators have agreed the terms of the temporary allocation of the radio spectrum and the Ministry of Communications (now the Ministry of Economic Development) accepted such agreement and made it binding by assigning temporarily the available frequencies as shown in the table below (local broadcasters are indicated by italics, the others being national broadcasters). Three channels have been left available, two of which are reserved for assignment to new entrants.
It is interesting to note that it is not completely clear what criteria have been used by the Ministry in order to determine how many frequencies to assign to each broadcaster, given that Agcom’s resolutions are clear on that point.
The Ministry might have assigned a resource to each operating broadcaster to ensure the continuity of analogue and digital transmissions after the switch-off. This means that each analogue broadcaster and each digital network operator should have one of the available frequencies assigned. In this case, the result of the first temporary allocation could become quite acceptable, although the choices made by the Ministry are still not completely clear.
In Sardinia the switch-off is scheduled for 31 October 2008, and in the other technical areas switch-off is supposed to take place in 2009.
The assignment proceeding will also continue after the switch-off has take place, as the Italian government has to carry out and complete negotiations with other interested countries for the coordination of the respective radio spectrum allocation.

Auction for assignment of rights of use for broadband wireless access services (WIMAX)

On 19 October 2007 the Italian Ministry of Communication (now the Ministry of Economic Development) published in the Italian Official Journal the call to tender for the rights to use three blocks with frequencies of 2x21MHz each, in the range 3.4-3.6GHz, for a number of regional and macro-regional geographical areas.
On 4 February 2008 the Italian Ministry of Communication published the list of the initial bids in the WIMAX auction. The auction started on 13 February 2008 and ended on 27 February 2008. The licences were issued by the Ministry of Communications in late May 2008.
In 2008 the licensees started planning and implementing their respective WIMAX networks in order to provide the promised coverage and start supplying services to the public to meet the deadline imposed by the Ministry (30 months from the release of the licence).

An extract from The European Antitrust Review 2009